Strategy Inc. Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. Strategy Inc. operates as a Bitcoin Treasury Company and an enterprise analytics software provider. The company's strategy involves accumulating Bitcoin as a primary treasury reserve asset while maintaining a software business focused on AI-powered analytics. As of the reporting date, the company held approximately 762,099 Bitcoin.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenues | $124.3 million | $111.1 million |
| Gross Profit | $83.4 million | $77.1 million |
| Net Loss | $(12.54) billion | $(4.22) billion |
| Loss Per Share (Basic & Diluted) | $(38.25) | $(16.49) |
| Unrealized Loss on Digital Assets | $(14.46) billion | $(5.91) billion |
| Cash and Cash Equivalents | $2.21 billion | $39.9 million |
| Total Assets | $54.27 billion | $61.64 billion |
| Long-Term Debt (Net) | $8.17 billion | $8.16 billion |
| Preferred Stock (Mezzanine Equity) | $8.98 billion | $6.92 billion |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 11.9% year-over-year, driven by a 58.7% increase in subscription services revenue ($58.9 million), partially offset by declines in product licenses and support.
- Bitcoin Valuation Impact: The company recognized an unrealized loss on digital assets of $14.46 billion, compared to $5.91 billion in Q1 2025. This was due to a decline in Bitcoin's fair market value from $87,515 (Dec 31, 2025) to $67,773 (March 31, 2026).
- Capital Raising: The company raised approximately $7.36 billion in net proceeds from equity offerings (Class A common stock and Preferred Stock) during the quarter, primarily used to purchase 89,599 additional Bitcoin.
- Tax Position: Due to Bitcoin's fair value falling below cost basis, the company reversed a $2.42 billion deferred tax liability and established a full valuation allowance of $2.23 billion against domestic net deferred tax assets.
- Preferred Stock Issuance: The company issued additional shares of STRC, STRK, and other preferred stock series, increasing mezzanine equity by approximately $2.07 billion.
Guidance, Outlook, and Risks
- Bitcoin Strategy: Management continues to pursue a strategy of accumulating Bitcoin using proceeds from capital markets. The company acquired 89,599 Bitcoin in Q1 2026, bringing total holdings to 762,099.
- Liquidity: The company maintains a "USD Reserve" of approximately $2.14 billion (as of March 31, 2026) to support dividend and interest obligations. Management does not expect software operations alone to satisfy liquidity needs and relies on equity/debt financing or Bitcoin sales.
- Dividend Obligations: The company paid $229.5 million in cash dividends on Preferred Stock during the quarter. STRC Stock dividends are variable and were set at 11.50% per annum.
- Risks:
- Volatility: Significant exposure to Bitcoin price fluctuations, which directly impacts net income and balance sheet value.
- Liquidity Risk: Dependence on capital markets to fund operations and debt service; inability to raise capital could force Bitcoin sales at unfavorable prices.
- Regulatory: Ongoing uncertainty regarding digital asset regulation, tax treatment (CAMT), and potential reclassification of Bitcoin as a security.
- Custody: Counterparty risk related to third-party custodians holding the majority of Bitcoin assets.
- Subsequent Events: As of April 26, 2026, the company held approximately 818,334 Bitcoin with a fair market value of $64.04 billion (based on a price of $78,258).
Investor Verification Checklist
- Verify the current market price of Bitcoin and its impact on the company's unrealized gains/losses and balance sheet valuation.
- Review the terms of the outstanding Convertible Notes and Preferred Stock, specifically dividend rates, conversion prices, and maturity dates.
- Assess the sufficiency of the "USD Reserve" relative to upcoming dividend and interest payment obligations.
- Monitor the status of the "STRK Amendment" ratification and its potential impact on liquidation preferences.
- Confirm the company's ability to access capital markets for future Bitcoin acquisitions given current market conditions.
- Review the valuation allowance on deferred tax assets and the conditions required for its release.